Regardless of the financial milestones you’re reaching, when it comes
to financial progress and credit, it’s important to understand the
factors that may impact your credit scores. Consider the following:

How many credit accounts do you have, and what
types? While there are many different ways of calculating
credit scores – also known as credit scoring models -- they
generally factor in the mix of different types of credit you have,
such as credit cards, installment loans, mortgages, and store
accounts. If you have too many different credit accounts – or
don’t have a mix of different types -- it could impact credit scores.

How many new credit accounts have you opened? Be
mindful of opening too many accounts at once and not opening more
accounts than you need. Credit scoring models usually look at how
many new accounts you have as well as how many new accounts you've
applied for recently. This may indicate you are planning on taking
on lots of new debt, which may indicate a greater credit risk to
potential lenders and creditors.

How old are your credit accounts? In general,
creditors and lenders like to see that you’ve been able to properly
handle credit accounts over a period of time. Credit accounts with a
longer history showing responsible credit behavior will reflect
positively on credit scores. Newer accounts will lower your average
account age, which may impact credit scores.

Are your balances high relative to your total available
credit limit? Creditors and lenders prefer to see a
lower debt to credit ratio – that’s the amount of credit you’re
using compared to the total amount available to you. If all of
your credit cards are near the credit limit, for example, this may
impact credit scores because it may indicate to lenders or
creditors that you may have too much debt.

Do you have any reported foreclosures, bankruptcies, short
sales, or delinquencies? Having this type of information
on your credit history may impact credit scores. If you have gone
through a reversal of fortune, and had to file for bankruptcy or
completed a foreclosure, credit scores may reflect this negative
information for several years.

What are some other factors that might affect credit scores?

There are several other factors that might affect credit scores, and
it’s important to note that lenders view these factors in different ways.

Here are some examples of those factors:

Missing payments or making late payments

Having a past-due account transferred to a collection agency or
debt buyer

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